Celsius Bankruptcy: Here’s how Celsius broke up and why bankruptcy may be the only option for the crypto lending startup | tech news

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On June 12, Celsius Network, one of the biggest players in crypto lending, announced that it was suspending all withdrawals and remittances for all of its 1.7 million crypto customers due to what the crypto startup described as “extreme market conditions.” designated, freezes.

The news sent shockwaves through the crypto market, sending Bitcoin and other cryptocurrencies down as much as 10 percent. The following day, bitcoin fell below $21,000 for the first time since 2020 as the crypto market surpassed $2 trillion.

In a memo to customers on Monday, Celsius said, “Due to extreme market conditions, we are announcing today that Celsius is pausing all withdrawals, swaps and inter-account transfers.”

To stay afloat, Celsius said it was looking into restructuring its operations after announcing on June 12 that it would “[needs] to stabilize liquidity and operations” and “to take measures to preserve and protect assets”. The struggling startup has reportedly hired lawyers with expertise in restructuring and bankruptcy to help it navigate the current market and fix its financial woes.

As of mid-May, Celsius had approximately $12 billion in assets. People familiar with the current situation also told The Wall Street Journal that Celsius had hired restructuring lawyers after the account freeze and was considering alternative financing from investors and was open to a different financial structure.

However, that doesn’t stop users and investors from asking this simple question: how did we get here? How come nobody saw the writing on the wall? To answer these questions, it is important to understand the people behind the company.

Celsius was founded in 2017 by Alex Mashinsky and S. Daniel Leon. The five-year-old cryptocurrency lending platform offers crypto investors above-average interest rates on their deposits. Through May, Celsius has lent more than $8 billion to clients and nearly $12 billion in assets under management, the site said, down more than half from October, and 8.2 in total loans Billions of dollars processed.

The first thing everyone should know about Alex is that he claims to have a lot of experience. According to a 1999 article referenced on the US Securities and Exchange Commission (SEC) website, Alex attempted to “import urea from Russia, sell Indonesian gold to Switzerland, and broker toxic sodium cyanide, which is found in excavated in China to be used by gold miners in the United States”.

“He [Alex] attempted to import urea from Russia, sell Indonesian gold to Switzerland, and broker toxic sodium cyanide unearthed in China for use by gold miners in the United States.

These ventures eventually failed and Alex turned around. That was not all. According to Alex’s own personal website, Alex claimed to be “the founder of eight startups and three unicorns.” He also claimed to have invented VoIP (Voice over Internet Protocol) technology.

“Alex has raised over $1.5 billion with over $3 billion in exits and 50+ patents and now leads the Celsius team with over $25 billion in crypto assets,” he said on his site.

You can use it to earn interest on your crypto and borrow for it instantly. This startup has developed the next generation of decentralized lending and lending products that leverage cryptocurrency. Celsius Network addresses the financial needs of today’s global consumer through high-yield income and low-cost credit accessible through a mobile app.

However, according to a Dirty Bubble Media tweet citing a Celsius insider, “Celciform is calling back loans to their institutional borrowers.”

But the current situation with Celsius appears to be much more precarious. According to a Reddit user, Celsius has stopped accepting its own token ( $CEL ) for interest payments. In an alleged and undated letter to one of its users, Celsius said:

“Currently we do not accept CEL as an available interest payment option.”

But Celsius issues seem to run much deeper than we were first made aware. CoffeeZilla, a Youtuber known for uncovering scams, said that “Celsius had further issues with an ETH2.0 derivative in DEFI pools where they were stuck with either keeping their staked ETH2 or a lower value derivative for sale.”

In a related report, CoinDesk explained how staked ether became the focus of crypto stress and how it spread from Celsius to Three Arrows. Another crypto news outlet also hinted that bankruptcy might be the only remaining option for Celsius.

In the video below, CoffeeZilla went into more detail as to why Celsius fell apart. Enjoy!


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